Kenya and Uganda ended months of debate in August to sign an agreement on an oil pipeline costing almost $4 billion. Finding the money to build it and companies to start pumping crude may be a harder task. The 1,500-kilometer (930-mile) pipeline is key for exporting the region’s crude when production finally begins -- 2018 in Uganda’s case. With oil prices languishing below $50 a barrel, there’s little incentive for companies such as Tullow Oil Plc, Africa Oil Corp., China’s CNOOC Ltd. and France’s Total SA to keep investing. “The lower oil price has created a great deal more of uncertainty around future oil production, given that additional capital expenditure will be required to make oil production a reality,” Razia Khan, head of Africa economic research at Standard Chartered Plc in London, said in an e-mailed response to questions.
Tullow Oil has resumed gas exports from its flagship Jubilee field in Ghana earlier than expected.
Ugandan police blocked opposition leader Kizza Besigye from leaving his home and arrested former Prime Minister Amama Mbabazi as they prepared to start their presidential election campaigns, their parties said. Besigye, who lost three previous elections to President Yoweri Museveni, was detained after attempting to leave his home to attend a rally to campaign as a candidate for the Forum for Democratic Change, his driver Asuman Semakula said by phone. Besigye, 59, is competing against party President Mugisha Muntu to run in the 2016 poll.
Total is seeking international arbitration regarding a tax disagreement with Uganda. The debate could delay oil production in the east African country further. In 2006 the country struck hydrocarbon deposits along its border with the Democratic Republic of Congo. The country’s crude reserves are estimated to be around 6.5billion barrels by government geologists.
Tullow Oil Plc, Total SA and Cnooc Ltd. are set to invest almost $14 billion developing oil fields in Uganda, according to Jimmy Mugerwa, general manager of Tullow’s operations there. “With the partner companies, we are looking at $8 to $10 billion for the upstream and $3 to $4 billion when we start the pipeline construction,” Mugerwa said in an interview Thursday in Kigali, the capital of neighboring Rwanda.
Uganda has awarded a $4billion oil refinery project to a consortium led by RT Global Resources, which is owned by Russia’s Rostec. The government and RT will negotiate the terms of a joint venture to engineer and finance the $2.5billion refinery plus a product pipeline and associated infrastructure. The country struck hydrocarbon deposits in 2006 but commercial production was delayed and is not expected to start until 2018 at the earliest.